The Role of Industrial Policy: Lessons from Asia

This chapter draws comparative lessons from the success and failures of industrial policy in Asia in the development of organizational and technological capabilities. The chapter points out that, while the UK still retains a lead over many emerging (Asian) economies in the organization of innovation, de-industrialization has weakened the UK’s ability to exploit the tacit knowledge embedded in the organizational routines of manufacturing firms. As a result, the UK has fallen behind in terms of its capacity to regain a broad base of competitive firms, raising the risk that successful innovation strategies will be accompanied by the offshoring of manufacturing elsewhere. In trying to re-acquire firm-level competitive capabilities, the chapter documents there is much the UK can learn from the rapid industrialization of Asian economies, particularly with regard to identifying and addressing constraints utilizing appropriate policy instruments within specific local, political, and institutional contexts